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UPDATE 2-UK house prices surge the most in 11 years as lockdown lifts

Fri, 31st Jul 2020 08:12

(Adds context)

By David Milliken

LONDON, July 31 (Reuters) - British house prices jumped the
highest in 11 years this month, adding to signs that parts of
the economy are rebounding rapidly as coronavirus restrictions
are eased.

Mortgage lender Nationwide said average house prices leapt
by 1.7% in July, above all forecasts in a Reuters poll of
economists and the biggest monthly increase since August 2009,
when the market was recovering from the financial crisis.

"The bounce back in prices reflects the unexpectedly rapid
recovery in housing market activity since the easing of lockdown
restrictions," Nationwide chief economist Robert Gardner said.

The Bank of England reported that mortgage approvals - a
first step to house purchases - quadrupled in June after hitting
a record low in May, though they remained more than 40% below
pre-pandemic levels.

Prices are now 1.5% higher than they were a year ago, though
Nationwide said that on a seasonally adjusted basis, they were
1.6% below a peak reached in April.

The mortgage lender said it expected price gains to continue
in the short term, helped by a temporary cut in property
purchase tax which finance minister Rishi Sunak announced this
month to help what he saw as an ailing market.

But these price increases risked proving a "false dawn" if
unemployment surged later this year when temporary job support
measures end, Nationwide's Gardner warned.

Britain's economy shrank by a quarter over March and April
due to the unprecedented hit from the coronavirus lockdown.

Some Bank of England officials fear that while there might
be an initial rapid bounceback, this will rapidly slow and it
could take years for the economy to regain its former size.

Retail sales are almost back at pre-pandemic levels, for
example, but many pubs, restaurants and entertainment venues are
closed or operating below capacity due to social distancing
restrictions and public concern about the coronavirus.
(Reporting by David Milliken; editing by John Stonestreet and
Nick Macfie)

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